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“Another troubling aspect of Moody’s rating process is that it was conducted without the transparency mandated under the Dodd-Frank Act and required by Moody’s own Professional Code of Conduct, which is posted on Moody’s website. 1 Specifically, Moody’s still has not shared material capital model results with us, despite our repeated requests throughout the process. As importantly, on the limited information provided, Moody’s would not discuss underlying assumptions used to achieve these summary results nor assure us that all Moody’s rated companies are stressed similarly.

“If we look at the three years since our last detailed Moody’s review, when AGM and AGC were assigned ratings of Aa3, we have materially increased our financial strength while significantly decreasing our insured exposures. During this period of global financial stress, Assured Guaranty produced a total of $1.8 billion in operating earnings. We increased statutory capital by $1.4 billion and decreased our statutory insured par in force by $116 billion, which included an $11.1 billion reduction of U.S. residential mortgage-backed securities (RMBS). Currently, 22% of our remaining U.S. RMBS par exposure is covered by loss mitigation agreements, further protecting Assured Guaranty’s capital. Our solid capital position and decreasing exposure over this time period has also resulted in a 38% reduction in our insured leverage. We also held total claims-paying resources at approximately $12.5 billion even after paying over $3.0 billion (before R&W recoveries) to protect policyholders. These strong results certainly should have led, at a minimum, to a rating affirmation.

“Additionally, over the last three years, representation and warranty (R&W) providers have paid or agreed to pay $2.7 billion for R&W breaches in our insured RMBS, bringing the total to date to $2.8 billion, significantly curtailing our exposure to future adverse development in this asset class. We have further opportunities to recover more losses from the R&W providers who have not settled but are subject to outstanding litigation that has so far been favorable for financial guarantors. This should further contribute to maintaining capital adequacy.